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State Regulators Approve Air Permit With Greenhouse Gas Emissions Rules

Environment Reporter™ keeps you fully up to date on rapidly changing developments in courts, Congress, federal agencies, state legislatures, industry, and environmental organizations.

HOUSTON--Louisiana regulators approved in late January what is believed to be the first air quality construction and operating permit in the United States that includes emissions control requirements for greenhouse gases.

The permit will allow work to proceed on a direct reduction iron production facility, which is the initial phase of the construction of a Nucor Corp. iron and steelmaking complex in St. James Parish, La.

A “stay of effectiveness,” however, has been placed on a separate modified permit for the pig iron portion of the complex until a petition to the Environmental Protection Agency and a pending lawsuit are resolved, a Department of Environmental Quality official told BNA Feb. 7.

The DEQ-approved permit for the Nucor facility, located between New Orleans and Baton Rouge, follows federal Clean Air Act rules that took effect Jan. 2 that require pre-construction permits for large new and modified facilities to include emissions controls for greenhouse gases. The department approved the permit for the initial phase of Nucor direct reduction iron making plant on Jan. 27.

Prevention of significant deterioration (PSD) provisions of the Clean Air Act require new and modified sources to limit and obtain permits for emissions of regulated air pollutants. Under PSD, these sources must limit their emissions using best available control technology (BACT), determined on an individual basis for each source.

Under EPA rules, PSD requirements were applied to emissions of carbon dioxide and other greenhouse gases from large emissions sources starting Jan. 2. An EPA official told BNA the Louisiana permit is the first PSD permit for greenhouse gases that the agency is aware of.

The Nucor plant site includes 4,000 acres of sugar cane fields near small communities on the Mississippi River.

Permit Includes Energy Efficiency Standard.

The Nucor permit includes an energy efficiency standard for the plant as a surrogate for a carbon dioxide emissions limit, a move that followed EPA guidance issued in November saying that PSD permits for greenhouse gases are likely to emphasize energy efficiency (41 ER 2504, 11/12/10).

According to a summary of public comments posted by the Louisiana DEQ, the permit expresses the greenhouse gas emissions limit as measurement of energy used per output of steel.

The limit is 13 million British thermal units of natural gas per metric ton of direct reduced iron, which the company will use to produce steel. DEQ estimates the plant will emit 3.39 million metric tons of carbon dioxide per year.

In a Feb. 7 statement about the Nucor permit, EPA said, “This step reinforces the reality that common sense approaches to reducing carbon pollution work, and that well designed, highly efficient facilities can cut emissions while creating jobs. EPA is currently reviewing the permit for consistency with federal requirements, and anticipates collaboratively working with DEQ and Nucor to address any concerns.”

Permit Called Precedent-Setting.

The permit presents an example of how states may implement greenhouse gas emissions permitting and control requirements, observers said.

Maleah Geertsma, attorney with the Climate Center at the Natural Resources Defense Council, told BNA that the permit is precedent-setting because it is the first for greenhouse gas emissions.

Geertsma, though, said that in large ways, the permit is business as usual, as with any PSD permit. According to Geertsma, the state proposed limits, EPA and others commented, and the final permit reflects the state's response to those comments.

In comments submitted to DEQ on Jan. 7, when the permit was in draft stage, EPA expressed concern that DEQ was not setting an actual emissions limit for carbon dioxide from the plant.

EPA also said DEQ did not analyze carbon capture and storage as a control technology. DEQ responded that it analyzed carbon capture and storage and found it infeasible for the Nucor plant.

In addition, EPA said the proposed facility would not have adequate monitoring for carbon dioxide emissions. DEQ responded that the permit requires monitoring of natural gas use and direct reduced iron output, which will yield the carbon dioxide emissions level.

Geertsma said EPA is asking Nucor and Louisiana DEQ to document all their decisions, and that if that is done, sources should have little trouble getting permits that will stand up to scrutiny.

Richard Alonso, an attorney at Bracewell & Giuliani, told BNA he expects environmental groups to challenge the permit, saying that they are not likely to be satisfied with greenhouse gas emissions provisions in the Nucor permit.

Pig Iron Permit Stayed.

While DEQ cleared the PSD permit for the Nucor plant's initial phase, it placed a stay of effectiveness on a pig iron plant because of outstanding issues the company still must address. They include a lawsuit filed in federal court and a petition sent to EPA, Sam Phillips, assistant secretary, Office of Environmental Services, who oversees all permitting for DEQ, said.

The pig iron plant already has its PSD permit.

The lawsuit, filed against EPA in U.S. District Court for the Eastern District of Louisiana by Zen-Noh Grain Corp., alleging the pig iron plant permits do not comply with the Clean Air Act because the company and public were denied the opportunity to review and comment on the air quality impacts of the aggregate direct reduced iron and pig iron manufacturing plants, among other claims. Zen-Noh's grain elevator is located adjacent to property where Nucor plans to construct the iron-making facility (Zen-Noh Grain v. Jackson, E.D. La., No. 2:10-cv-4367, 12/16/10).

A petition to the EPA submitted in June 2010 on behalf of the Sierra Club and Louisiana Environmental Act Network, has requested the agency revoke the Title V permit for the pig iron plant.

“Nucor cannot begin construction on the pig iron facility until these issues are resolved,” Phillips said. “Our air permits are pre-construction permits, which means you must have a permit in place before initiating construction.”

In the pending modified pig iron permit, Nucor reduced the facility's size by about one-half, Phillips said. The original pig iron facility air permit was awarded in May 2010, he said.

Charlotte, N.C.-based Nucor requested the stay of effectiveness from DEQ so it could start construction of the direct reduced iron portion of the project immediately, Phillips told BNA.

The project could eventually include five phases--the direct reduced iron facility, a pellet operation, a blast furnace and coke ovens, and a steel mill. The entire complex ultimately will represent a $3.4 billion investment, according to Nucor.

Questions Over Permit.

Corinne Van Dalen with the Tulane Environmental Law Clinic in New Orleans said that among other issues the Nucor pig iron plant failed to include maximum available control technology for the top gas boilers.

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